The SAFE BANKING ACT Will Most Likely Pass
As of today, Cannabis has been a Schedule I Drug ever since President Nixon signed the Controlled Substances Act. This made sale, distribution and possession of cannabis a punishable offense. Now that the progressive legalization of marijuana has taken a foot hold on a state level, it has created a problem for businesses that are trying to operate within the law. An environment has been created where you can easily abide by your state’s laws, while at the same time breaking federal laws and possibly running the risk of prosecution and imprisonment.
The U.S. House of Representatives are predicted to pass the SAFE Banking Act. The Bill has been drafted by U.S. Rep. Ed Perlmutter (D-Colo), Steve Stivers (R-Ohio), Reps, warren Davis (R-Ohio) and Denny Heck (D-Wash). Rep. David Joyce stated that the way the cannabis federal laws are now, do nothing but get in the way of the rights states have, to regulate their own cannabis laws. He also claims that the conflict has negatively impacted businesses who are obeying the laws, wasted the resources of law enforcement that are badly needed in enforcing more serious criminal offenses and has held back important medical research.
Attorney General William Barr voiced his support of the bill, stating that he would not enforce federal laws on marijuana in states that have legalized it. Treasury Secretary Steven Mnuchin is another supporter of the proposed legislation. He admitted that there’s a conflict of laws between the federal government and states where marijuana is legal, and that federal lawmakers have no way to remedy the situation.
Currently credit union and banks are under very strict regulations when it comes to serving the cannabis industry. They aren’t only restricted from serving cannabis businesses as customers, they are mandated to file reports that raise suspicion of a transaction that involves a cannabis business. This has created unnecessary administrative costs that usually end up being paid by the business owner. It also heightens the chances of breaking anti-money laundering laws.
If this bill passes, it would finally allow cannabis businesses to receive loans from banks. It will set them free from the burden of having to perform cash transactions. This is currently not an option, since banks are prohibited from serving cannabis businesses that are operating in a state where marijuana is legal.
Under the SAFE Banking ACT, banks will be given all the legal waivers to provide services to cannabis businesses in states where it is legal. The protection would expand to other businesses that serve cannabis businesses from being slapped with money laundry or other white-collar crimes. This would be breath of fresh air for businesses that are forced to keep large amounts of cash at their business establishment. This increases the likelihood for these businesses to be victims of crime that can turn violent, which can create an unsafe environment for employees and customers.
Currently, simple options such as accepting credit cards and direct deposit to pay employees is a simple part of doing business that most business owners take for granted. These options are not available for cannabis business owners. Also added in the act, is that federal banking institutions must submit to Congress a yearly report on the availability of services to women and minority run cannabis businesses, along with ideas on the expansion of such services.
The bill still leaves a lot of questions financial institutions may have, such as what to do if a cannabis business fails to have a license to operate. Can they foreclose on cannabis related collateral? This is something that will eventually need to be addressed if this bill passes.
The ABA is not the only organization that sees the value in this act. PIA is the National Association of Professional Insurance Agents they represent all the states in the U.S. including the District of Columbia and Puerto Rico. Their concern is with the protection of independent insurance agents. These agents are stuck between a rock and hard place, because of state and federal cannabis laws that are on opposing sides of the law.
Lauren G. Pachman stated that the organization is looking forward to cooperating with lawmakers. She hopes this will result in independent insurance agents being able to effectively do business without their clients or themselves breaking the law. This is extremely important, as cannabis businesses need insurance due to various risks such as product liability, cyberscuirty, consumer class action suits and much more.
While this does not legalize marijuana entirely, it is a step in the right direction. It’s also important to note that if this passes, it will only benefit legitimate cannabis related businesses. Which is why it is vital for dispensaries and cultivators to try their absolute best to ensure they are licensed and are abiding by all the legislation that their states impose, regardless of how costly, time cumbersome and burdensome it can be. Unfortunately, in our current legal state, it seems to be the cost of doing business.